THIS is the time of the year when vehicle owners are all scrambling to come up with the money to renew their car registrations. But it is not always the money for the registration that is the headache of these vehicle owners. Choosing the right insurance for their car is also one of their problems.

And that is also why the government is now faced with the difficult task of choosing who should issue compulsory third party liability (CTPL) for registered vehicles—a right that is being contested by two opposing groups: the Philippine Insurers and Reinsurers Association (Pira) and the Government Service Insurance System (GSIS).

Since becoming mandatory in the 80s, CTPL insurance has ballooned into a P3-billion industry and is now being hotly pursued by the two groups that are now trying to get hold of the entire pie.

The issue began last year, when several anomalies regarding the issuance of the CTPL coverage to vehicle owners surfaced. It was only after figuring in accidents that many of these vehicle owners discovered that the policies issued to them were spurious and were thus forced to pay for the damages they incurred.

Vehicle owners began asking questions, which prompted authorities to look into the matter.  It was soon determined that more than P5 billion was raised from CTPL premiums but only P3 billion worth of policies was officially registered and valid. Where the other P2 billion ended up is anybody’s guess. 

The government, after investigating the matter, announced a plan to solve the problem. Under the plan, the GSIS (Government Service Insurance System) would become the sole issuer of CTPL policies, and as such, shall enter into an agreement with the DOTC (Department of Transportation and Communication) and LTO (Land Transportation Office) for the automatic inclusion of the CTPL coverage as part of the vehicle registration process. 

Just like the way it processes the files and claims of its members, GSIS claims that this would “provide public accountability and simplify the process of filing claims for accidents.” Aside from these, it also claims that there “shall be improved efficiency and order, put a stop to the connivance between LTO personnel with syndicates that peddle spurious CTPL insurance policies and phony certificates of coverage, and ensure payment of taxes to the government since the present GSIS system is free of leakages.”

The Pira, composed of some 94 insurance companies, came out to oppose the government plan and drafted its own proposal.

Under its scheme, the Pira shall be the sole insurer of the CTPL for private vehicles. It shall also put up a so-called “clearing house” where all certificates of coverage shall be validated, while it manages the sale and distribution of the CTPL policies.

The clearing house system is similar to that of the banking industry, wherein the payment of premiums shall be made by automatically debiting the money those insurance companies have deposited in the banks. A client who buys a CTPL policy goes to a bank and chooses an insurance company before paying the premium. The bank then transmits the information to the clearing house that is composed of the various insurance companies that sell CTPL policies. The clearing house, which checks whether that insurance company is authorized to do business, will then transmit the said information to the Insurance Commission and to the Land Transportation and match it to their system.

Pira claims that the clearing house “will make wide use of information technology since there will be less human intervention.” Vehicle owners will also have the freedom to choose from the more than 90 insurance companies-members of the clearing house. They can also easily shift to another insurance company if they are unsatisfied and shall not be stuck to a sole provider.

But there are several comments aired against two contending proposals by the Pira and the GSIS.

One school of thought is that Pira’s proposal of having a clearing house might be the start of a cartel wherein the big insurance companies shall end up as the major players. Another is that it will “create more red tape for vehicle owners and that Pira has already lost its credibility and should clean itself of bad eggs first.”

On the other hand, those who are against the GSIS proposals said that it is “reverse privatization which is against the spirit of free enterprise.” They added that the GSIS is already plagued with huge internal and external problems at present and taking away business from many insurance companies is confiscatory and will result in the deprivation of income without due process.

In one forum held late last year wherein all the contesting groups were present, the Automobile Association Philippines (AAP), the biggest car club in the country headed by its executive director Jose Armando Eduque, came out with its position on the matter.

The CTPL, according to Eduque, “has become an ordinary piece of paper—a mere requirement for vehicle registration.  Many motorists sometimes no longer care whether what they bought is genuine or not. But this suddenly changes when one figures in an accident. He suddenly discovers that he is not covered and ends up not being able to indemnify his victim,” he said

The AAP believes strict regulation is needed to restore the integrity of the CTPL business. But Eduque said their members would not want a single company or agency to have a monopoly of the CTPL. “We still want an open market where the customer—which in this case is the car owner—has the freedom to choose from whom to buy his or her CTPL insurance,” Eduque said.

Until such time that this major issue is resolved, vehicle owners must be vigilant enough to look for a genuine insurance company from whom they can buy their CTPL policy. If not, they are bound to experience the sad plight of those who purchase fake policies and end up paying a large sum to their victims when they figure in an accident.

THERE is a saying that to whom much is given, much is required. In the automotive world, that is especially true with locally available luxury car brands (e.g., BMW, Mercedes-Benz, Chrysler, Audi, Volvo, Jaguar, Land Rover, Ferrari and Maserati), considering the high admission price of each and every vehicle under the aforementioned marques.

AS we finished writing that column on the MRT, news came out the next day that the government had just placed an order for several more coaches to accommodate the ever-growing number of daily commuters.

WHEN the BMW X3 was launched in 2003, the sports activity vehicle (SAV) got a lot of flak from reviews here and abroad. The chief complaints of economy-grade interior treatments, lack of power, harsh ride qualities and a relatively high asking price contributed greatly to its low sales volume. In order to boost sagging SAV sales, BMW recently launched the 2007 X3, with the hope that purchase order numbers will be as good—or even better—than its X5 sibling.

THE Philippines is set to plunge into an innovative international car challenge that could mean a lot in its continuing search for an alternative source of power and energy.

THIS is the time of the year when vehicle owners are all scrambling to come up with the money to renew their car registrations. But it is not always the money for the registration that is the headache of these vehicle owners. Choosing the right insurance for their car is also one of their problems.